Editor’s note: Snips’ annual look back and forecast of what’s ahead for our industry has never been more difficult to compile. Most experts wanted more time to reflect and number-crunch after the terrorist attacks on America September 11. We present our findings here, along with what we felt was the following timely message from ASHRAE President William Coad.
On September 11, 2001, an almost incomprehensible act of terrorism was perpetrated against the people of the world community. On behalf of the 58,000 members of our great Society, ASHRAE,
I express our sympathy and heartfelt condolences to all of those whose lives have been affected by this tragedy.
“As a society of engineers, it is in our nature to build. To witness purposeful destruction of lives, machines and structures is repulsive to us not only as human beings but doubly so as mankind’s builders.
“Ours is an international society and I would like to tell our members in the United States that we have received untold letters of sympathy, concern and encouragement from our fellow members, colleagues and friends throughout the world.
“This tragedy assuredly will bring the world community closer together than ever, to work as a single unit with the objective to rebuild what has been destroyed and to build a world where people of all nations will live in harmony and peace while realizing an ever-improving quality of life…”
Construction outlook a mixed bagThe Commerce Department reported U.S. construction spending fell in August at the fastest pace in more than a year as construction of nonresidential buildings like factories slumped.
The Commerce Department said spending on building fell 1.1% in August to a seasonally adjusted annual rate of $845.5 billion.
August’s drop was much steeper than the 0.3% decline forecast by economists in a Reuters poll, and was the largest fall since a 1.3% slump in July 2000.
According to Reuters, “The data were the latest to show that the U.S. economy was slowing even before the attacks of Sept. 11, which shook consumer confidence and led most economists to reduce economic growth forecasts.”
The report showed construction of residential buildings held up reasonably well in August, dropping just 0.4% to a seasonally adjusted annual pace of $387.3 billion. But construction of nonresidential buildings fell 3.6% to a seasonally adjusted annual pace of $196.7 billion in August.
While August’s report shows some slowing in construction spending, activity remains well above that seen one year ago. Construction spending in August was 5.2% higher than the annual pace seen in August of last year.
A report from the F.W. Dodge Division of The McGraw-Hill Companies agreed that construction was off in some sectors, but was optimistic: “For much of 2001, the construction industry has been one of the better performing sectors of a sluggish economy… However, growing weakness for the economy in the aftermath of the September 11th terrorist attack is expected to adversely affect construction…”
School construction continued strong, rising 5% by dollar volume in August. “Amusement-related” work including convention centers in Las Vegas ($225 million) and the Atlanta area ($60 million) helped. Health care facilities and churches also showed gains, while public buildings such as courthouses and jails were down drastically.
During the first eight months of 2001, total construction on an adjusted basis was up 2% compared to the prior year, according to the Dodge report. Residential building grew 4% and nonbuilding construction advanced 9%, but nonresidential building was down 5%. Geographically, most of the downturn was in the Northeast (2%) and South Atlantic (1%). The Midwest was unchanged, with increased in the West and South Central.
Nonbuilding construction was boosted by electric power plant construction in New York, California and Washington.
Equipment, wholesaler forecastAn annual survey of members of the Northamerican Heating, Refrigeration and Airconditioning Wholesalers Association (NHRAW) indicated an overall growth rate of 4.5% in 2000. At the end of October, NHRAW executive vice president Don Frendberg said the forecast for 2001 was a 1 to 1.5% growth rate, which he said remained “surprisingly strong” — helped along by new home construction, which was aided in turn by low interest rates. “We are remaining positive but not exceptional for this year,” he said.
Combined U.S. factory shipments of 541,623 central air conditioners and air-source heat pumps in August were up 8% from August 2000, according to the Air-Conditioning and Refrigeration Institute (ARI). Heat pump shipments of 119,418 units jumped 26% above those from August 2000. Combined shipments for the first six months were 7% below those from last year. The year-to-date total of 4,878,425 shipments of unitary air-conditioners and heat pumps was down 7% from January-August 2000.
August 2001 distributor shipments were down 18% from August 2000, with year-to-date shipments down 4%.
A recent survey showed 45% of the members of a metalworking trade association in October predicting a further downward turn in the economy for the remainder of the year. Forty-four percent thought it would stay the same, while only 14% felt the economy would improve during that period. The survey was conducted by The Precision Metalforming Association, Independence, Ohio, representing 1,600 suppliers of equipment, materials and services to the metal working industry. However, 31% of the group’s members held the same pessimism for the same period last year.